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Essential Year-End Tax Strategies for Los Angeles Fire and Police Pensions Employees: What You Need to Know Before 2023

Here are some things for Los Angeles Fire and Police Pensions employees and retirees to consider as they weigh potential tax moves between now and the end of the year.

1. Defer income to next year
Los Angeles Fire and Police Pensions employees must consider opportunities to defer income to 2023, particularly if you think you may be in a lower tax bracket then. For example, you may be able to defer a year-end bonus or delay the collection of business debts, rent, and payments for services. As a Los Angeles Fire and Police Pensions employee, doing so may enable you to postpone payment of tax on the income until next year.

2. Accelerate deductions
Los Angeles Fire and Police Pensions employees and retirees should also look for opportunities to accelerate deductions into the current tax year. If you itemize deductions, making payments for deductible expenses such as medical expenses, qualifying interest, and state taxes before the end of the year (instead of paying them in early 2023) could make a difference on your 2022 return.

3. Make deductible charitable contributions
As a Los Angeles Fire and Police Pensions employee, if you itemize deductions on your federal income tax return, you can generally deduct charitable contributions, but the deduction is limited to 50% (currently increased to 60% for cash contributions to public charities), 30%, or 20% of your adjusted gross income (AGI), depending on the type of property you give and the type of organization to which you contribute. (Excess amounts can be carried over for up to five years.)

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4. Bump up withholding to cover a tax shortfall
As a Los Angeles Fire and Police Pensions employee, if it looks as though you will owe federal income tax for the year, consider increasing your withholding on Form W-4 for the remainder of the year to cover the shortfall. Time may be limited for Los Angeles Fire and Police Pensions employees to request a Form W-4 change and for their employers from Los Angeles Fire and Police Pensions to implement it in time for 2022. The biggest advantage in doing so is that withholding is considered as having been paid evenly throughout the year instead of when the dollars are actually taken from your paycheck. This strategy can be implemented by Los Angeles Fire and Police Pensions employees to make up for low or missing quarterly estimated tax payments.

5. Save more for retirement
Deductible contributions to a traditional IRA and pre-tax contributions to a Los Angeles Fire and Police Pensions-sponsored retirement plan such as a 401(k) can reduce your 2022 taxable income. As a fortune 500 employee, if you haven't already contributed up to the maximum amount allowed, consider doing so. For 2022, Los Angeles Fire and Police Pensions employees can contribute up to $20,500 to a 401(k) plan ($27,000 if you're age 50 or older) and up to $6,000 to traditional and Roth IRAs combined ($7,000 if you're age 50 or older).* The window to make 2022 contributions to a Los Angeles Fire and Police Pensions-sponsored plan generally closes at the end of the year, while you have until April 18, 2023, to make 2022 IRA contributions.

*Roth contributions are not deductible, but Roth-qualified distributions are not taxable.

6. Take the required minimum distributions
If you are a Los Angeles Fire and Police Pensions employee age 72 or older, you generally must take required minimum distributions (RMDs) from traditional IRAs and Los Angeles Fire and Police Pensions-sponsored retirement plans (special rules apply if you're still working and participating in Los Angeles Fire and Police Pensions's retirement plan). You have to make the withdrawals by the date required — the end of the year for most individuals. The penalty for failing to do so is substantial: 50% of the amount that wasn't distributed on time. As a fortune 500 employee, making these distributions in a timely manner is essential as to avoid the late penalty.

7. Weigh year-end investment moves
Los Angeles Fire and Police Pensions employees and retirees shouldn't let tax considerations drive investment decisions. However, it's worth considering the tax implications of any year-end investment moves that you make. For example, if you have realized net capital gains from selling securities at a profit, you might avoid being taxed on some or all of those gains by selling losing positions. As a Los Angeles Fire and Police Pensions employee, any losses over and above the number of your gains can be used to offset up to $3,000 of ordinary income ($1,500 if your filing status is married filing separately) or carried forward to reduce your taxes in future years.

Tags: Financial Planning , Tax , Retirement , 2022

What is the purpose of the 401k/Savings Plan offered by Los Angeles Fire and Police Pensions?

The purpose of the 401k/Savings Plan offered by Los Angeles Fire and Police Pensions is to help employees save for retirement by allowing them to contribute a portion of their salary to a tax-advantaged account.

How can employees of Los Angeles Fire and Police Pensions enroll in the 401k/Savings Plan?

Employees of Los Angeles Fire and Police Pensions can enroll in the 401k/Savings Plan by completing the enrollment form available on the company's intranet or by contacting the HR department for assistance.

What types of contributions can employees make to the 401k/Savings Plan at Los Angeles Fire and Police Pensions?

Employees at Los Angeles Fire and Police Pensions can make pre-tax contributions, Roth (after-tax) contributions, and possibly employer matching contributions, depending on the plan specifics.

Is there a minimum contribution amount required for the 401k/Savings Plan at Los Angeles Fire and Police Pensions?

Yes, Los Angeles Fire and Police Pensions may have a minimum contribution amount, typically around 1% of the employee's salary, but employees should check the plan documents for specific details.

What is the maximum contribution limit for the 401k/Savings Plan at Los Angeles Fire and Police Pensions?

The maximum contribution limit for the 401k/Savings Plan at Los Angeles Fire and Police Pensions is subject to IRS regulations, which can change annually. Employees should refer to the latest IRS guidelines for the current limits.

Does Los Angeles Fire and Police Pensions offer employer matching contributions for the 401k/Savings Plan?

Yes, Los Angeles Fire and Police Pensions offers employer matching contributions to the 401k/Savings Plan, which can help employees increase their retirement savings.

How often can employees change their contribution amounts to the 401k/Savings Plan at Los Angeles Fire and Police Pensions?

Employees at Los Angeles Fire and Police Pensions can typically change their contribution amounts at any time, but they should check the plan rules for any specific restrictions.

What investment options are available within the 401k/Savings Plan at Los Angeles Fire and Police Pensions?

The 401k/Savings Plan at Los Angeles Fire and Police Pensions offers a variety of investment options, including mutual funds, target-date funds, and possibly other investment vehicles, depending on the plan.

Can employees take loans against their 401k/Savings Plan balance at Los Angeles Fire and Police Pensions?

Yes, employees may be able to take loans against their 401k/Savings Plan balance at Los Angeles Fire and Police Pensions, subject to the terms and conditions of the plan.

What happens to the 401k/Savings Plan when an employee leaves Los Angeles Fire and Police Pensions?

When an employee leaves Los Angeles Fire and Police Pensions, they have several options for their 401k/Savings Plan, including rolling it over to an IRA or another qualified plan, cashing it out, or leaving it in the plan if permitted.